Netflix reported a dramatic slowdown in subscribers in the first three months of 2021, ending a record run in growth during the coronavirus pandemic.
The streaming giant added 4 million new subscribers in the first quarter, 2 million fewer than its original estimate of 6 million and a quarter of the 8 million it added in the last three months of 2020. The company expects to add only about 1 million subscribers in the current quarter, which would be its slowest growth on record.
The company said a slowdown in production of new content because of the pandemic and last year’s massive gains were responsible for the fall. Netflix’s share price dropped 11% on the news.
The latest results came after a period of extraordinary growth for the company which added more than 36 million subscribers in 2020 to pass 200 million subscribers worldwide as Covid 19 triggered lockdowns across the world. That pandemic boom now seems to have run its course.
“The extraordinary events of Covid-19 led to unprecedented membership growth in 2020, as it pulled forward growth from 2021, and delayed production across every region,” the company wrote in a letter to shareholders. “As we discussed in past letters, these dynamics are also contributing to a lighter content slate in the first half of 2021, and hence, we believe slower membership growth.”
Netflix is also facing stiffer competition in streaming with new services from Disney’s Disney+, Comcast NBCUniversal’s Peacock as well as Apple and Hulu. But the company dismissed competition for its subscriber miss. “We don’t believe competitive intensity materially changed in the quarter or was a material factor in the variance as the over-forecast was across all of our regions,” it said.
Financially, Netflix’s latest quarter was in line with expectations. The company’s revenue grew 24% year over year.
This year Netflix hopes to ramp up its offerings with new series of hit shows including Sex Education, The Witcher and You as well as big-budget, large scale and star-driven features such as Red Notice, starring Gal Gadot, Dwayne Johnson and Ryan Reynolds and Don’t Look Up, with an Leonardo DiCaprio, Jennifer Lawrence, Cate Blanchett, Timothée Chalamet and Meryl Streep.